Glossary of Terms: R

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Estate Planning has its own vocabulary. To help you speak the language, we've created a glossary of the more commonly used words and phrases. This glossary is comprised of 26 individual pages, one for each letter of the alphabet. To find a particular word or phrase that starts with the letter "R" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.

Remainder person

A "remainder person" (previously called a "remainder man") is a principal beneficiary who gets the remaining assets after a predesignated period of time or after a certain event. For example, X leaves a specific bequest of $1,000 to A, provided that A survives X. X leaves all the rest and remainder of his property to B. B is a remainder person or remainder beneficiary.

Residence

The term "residence" means the place in which one lives; dwelling.

There is a difference between a person's residence and his domicile. A person's domicile may be in New York and he may still have a residence in Florida and Colorado. A residence is a place where a person lives without the intent to make that place a permanent home; whereas, a domicile is a place where a person intends to live permanently. As such, it is clear that a person may have several residences, but can have only one domicile. See "domicile."

Revocable trusts

A "revocable trust" is a living trust that the grantor has retained the right to amend or terminate at any time. Because the grantor retains the right to amend or terminate the trust, the grantor is treated as the owner of all property placed in the trust. Therefore, for federal income tax purposes, all income earned by the trust is taxed directly to the grantor and is required to be reported on the grantor’s federal income tax return. Accordingly, there are no tax benefits to the grantor in establishing a revocable trust. As discussed elsewhere, however, there are distinct non-tax benefits to establishing a revocable trust.

Rule against perpetuities

The term “rule against perpetuities” is a term used to describe a rule under common law that voids any transfer of an interest in property that does not vest within 21 years (plus period of gestation) after some life or lives in being at the time the interest is created. From as far back as the 1600s in feudal England, it was generally believed that people should not be permitted to tie up their property in trust for hundreds of years because it created a landed aristocracy and it stifled economic growth. As a result, the rule against perpetuities was born and it continues to exist in nearly all states today, with the exception of 10 or so states that have now repealed the rule against perpetuities in whole or in part. In states where the rule still exists, it is wise to include a provision in a trust instrument to the effect that no trust created thereunder will continue beyond the period permitted by the rule against perpetuities. Without that fail safe provision, the trust instrument may be void from the start. See also “dynasty trust” above. For a more detailed description, see the separate article entitled "Rule Against Perpetuities."